UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
July 31, 2003
Date of Report (Date of earliest event reported)
FIRST BANKS, INC.
(Exact name of registrant as specified in its charter)
MISSOURI 0-20632 43-1175538
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
135 North Meramec, Clayton, Missouri 63105
(Address of principal executive offices) (Zip code)
(314) 854-4600
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
FIRST BANKS, INC.
TABLE OF CONTENTS
Page
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.................... 1
SIGNATURES.................................................................. 2
ITEM 12 - RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On July 25, 2003, First Banks, Inc. issued a press release announcing its
financial results for the three and six months ended June 30, 2003. A copy of
the press release is attached as Exhibit 99.4.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
FIRST BANKS, INC.
July 31, 2003 By: /s/ Allen H. Blake
--------------------------------------
Allen H. Blake
President, Chief Executive Officer
and Chief Financial Officer
(Principal Executive Officer and
Principal Financial and
Accounting Officer)
Exhibit 99.4
First Banks, Inc.
St. Louis, Missouri
Contact: Allen H. Blake
President, Chief Executive Officer and Chief Financial Officer
First Banks, Inc.
(314) 592-5000
Traded: NASDAQ
Symbol: FBNKN - (First Preferred Capital Trust II, a subsidiary of First Banks,
Inc.)
FBNKM - (First Preferred Capital Trust III, a subsidiary of First
Banks, Inc.)
Traded: NYSE
Symbol: FBSPrA - (First Preferred Capital Trust IV, a subsidiary of First
Banks, Inc.)
FOR IMMEDIATE RELEASE:
First Banks, Inc. Announces
Second Quarter 2003 Earnings
St. Louis, Missouri, July 25, 2003. First Banks, Inc. ("First Banks" or the
"Company") reported earnings of $14.7 million and $33.7 million for the three
and six months ended June 30, 2003, respectively, compared to $9.4 million and
$17.4 million for the comparable periods in 2002. Results for 2003 reflect
increased net interest income, noninterest income and slightly reduced
provisions for loan losses, offset by higher operating expenses. Included in the
first quarter of 2003 was a gain of $6.3 million relating to the partial
exchange of First Banks' investment in an unaffiliated financial institution for
a 100% ownership interest in one of the unaffiliated financial institutions'
banking subsidiaries.
James F. Dierberg, Chairman of First Banks, said, "First Banks' financial
performance for the first six months of 2003 reflects our adaptation to the low
interest rate environment and weak economic conditions that have prevailed
during the last two years. During this time, we have focused on increasing our
net interest margin, improving asset quality and further strengthening our
overall financial position. Throughout 2002, we experienced higher-than-normal
loan charge-offs, loan delinquencies and nonperforming loans that led to
increased provisions for loan losses, thereby reducing net income. While we
believe we were successful in addressing the asset quality problems during 2002,
we are continuing to closely monitor our operations to address the ongoing
challenges posed by the current economic environment, including reduced loan
demand and lower prevailing interest rates."
Commenting further, Dierberg said, "We experienced continuing growth of net
interest income, primarily resulting from reduced deposit rates, the earnings on
our interest rate swap agreements that we entered into in conjunction with our
interest rate risk management program, which mitigate the effects of decreasing
interest rates, and a $61.3 million net reduction in our outstanding trust
preferred securities." The derivative financial instruments used to hedge First
Banks' interest rate risk contributed $15.8 million and $30.8 million to net
interest income for the three and six months ended June 30, 2003, respectively,
compared to $12.6 million and $23.8 million for the comparable periods in 2002.
In addition, during the second quarter of 2003, the Company redeemed $132.3
million of trust preferred securities that had been issued during 1997 and 1998.
In March 2003, First Bank Statutory Trust issued $25.0 million of trust
preferred securities in a private placement and in April 2003, First Preferred
Capital Trust IV issued $46.0 million of trust preferred securities in an
underwritten public offering. These transactions, coupled with the use of
additional derivative financial instruments, have allowed First Banks to reduce
its overall expense associated with the utilization of trust preferred
securities. Mr. Dierberg pointed out, "We are pleased with the results of these
transactions on our financial performance; however, prevailing low interest
rates, generally weak loan demand and overall economic conditions continue to
exert pressure on our net interest margin."
The Company recorded provisions for loan losses of $10.0 million and $21.0
million for the three and six months ended June 30, 2003, respectively, compared
to $12.0 million and $25.0 million for the comparable periods in 2002. During
2002, the Company experienced a higher level of problem loans and related loan
charge-offs and past due loans resulting from the economic conditions within the
Company's markets, additional problems identified in two acquired loan
portfolios and continuing deterioration in the portfolio of leases to the
airline industry. Net loan charge-offs were $10.8 million and $13.3 million for
the three and six months ended June 30, 2003, respectively, compared to $7.9
million and $19.7 million for the comparable periods in 2002. Net charge-offs
for the six months ended June 30, 2003 include charge-offs of $10.4 million
associated with the commercial leasing portfolio and were primarily concentrated
in two equipment leases aggregating $7.0 million. Nonperforming assets at June
30, 2003 increased slightly to $83.2 million from $82.8 million at December 31,
2002 and $77.1 million at June 30, 2002. In recognition of this, the allowance
for loan losses increased to $107.8 million at June 30, 2003, compared to $99.4
million at December 31, 2002 and $103.8 million at June 30, 2002. The Company
expects nonperforming assets to remain at the higher levels recently experienced
and considers these trends in its overall assessment of the adequacy of the
allowance for loan losses.
Noninterest income was $25.4 million and $57.1 million for the three and
six months ended June 30, 2003, respectively, compared to $20.5 million and
$39.4 million for the comparable periods in 2002. The increase in noninterest
income is primarily attributable to a $6.3 million gain on the exchange of
common stock of Allegiant Bancorp, Inc., St. Louis, Missouri ("Allegiant"), held
by First Banks for a 100% ownership interest in Bank of Ste. Genevieve, Ste.
Genevieve, Missouri. The increase is also due to gains on mortgage loans sold,
which increased to $10.1 million and $20.7 million for the three and six months
ended June 30, 2003, respectively, from $7.3 million and $12.5 million for the
comparable periods in 2002. This increase reflects continued reductions in
mortgage loan rates, resulting in high volumes of new originations and
refinancings as well as the growth of the Company's mortgage banking activities.
Higher noninterest income for 2003 also reflects increases in service charges on
deposit accounts and customer service fees.
Operating expenses were $64.1 million and $123.7 million for the three and
six months ended June 30, 2003, respectively, compared to $59.2 million and
$116.1 million for the comparable periods in 2002. The increased operating
expenses primarily result from increases in salaries and employee benefit
expenses associated with acquisitions, increased commissions paid to mortgage
loan originators due to continued higher loan volumes, and staff realignments
surrounding the Company's core business strategies. In addition, occupancy and
furniture and equipment expenses have increased and result primarily from
acquisitions, technology expenditures for equipment, continued expansion and
renovation of various corporate and branch offices and a $1.0 million lease
termination obligation associated with the relocation of the Company's San
Francisco-based loan administration department to southern California. The
Company also incurred write-downs of $3.7 million on operating leases associated
with the commercial leasing business, which were primarily a result of
reductions in estimated residual values. These higher operating expenses,
exclusive of the operating leases, are reflective of recently completed
acquisitions and ongoing investments made in conjunction with the execution of
First Banks' overall business plan.
At June 30, 2003, First Banks had consolidated assets of $7.10 billion and
operated 151 offices in Missouri, Illinois, California and Texas.
# # #
This release contains forward-looking statements that are subject to risks and
uncertainties arising out of or affecting the Company's business, not all of
which can be predicted or anticipated. These statements are based on information
currently available to First Banks' management, and numerous factors might cause
actual results to differ materially from those contemplated in the
forward-looking statements. For additional information, see the discussions of
forward-looking statements that appear in the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" sections of First
Banks' most recent Annual Report on Form 10-K and subsequent Quarterly Reports
on Form 10-Q, as filed with the Securities and Exchange Commission.
FIRST BANKS, INC.
FINANCIAL SUMMARY
(in thousands, except per share data)
(unaudited)
Condensed Consolidated Statement of Income Information
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2003 2002 2003 2002
---- ---- ---- ----
Interest income............................................... $ 98,270 107,303 197,877 213,915
Interest expense.............................................. 27,257 41,615 57,701 84,105
Net interest income........................................ 71,013 65,688 140,176 129,810
Provision for loan losses..................................... 10,000 12,000 21,000 25,000
Noninterest income............................................ 25,431 20,529 57,076 39,364
Noninterest expense........................................... 64,051 59,220 123,736 116,078
Income before provision for income taxes................... 22,393 14,997 52,516 28,096
Provision for income taxes.................................... 7,693 5,328 18,785 10,099
Net income................................................. 14,700 9,368 33,731 17,368
Basic earnings per common share............................... $ 615.70 390.35 1,411.74 720.18
======== ======== ========= =======
Diluted earnings per common share............................. $ 606.04 384.48 1,390.06 712.75
======== ======== ========= =======
Condensed Consolidated Balance Sheet Information
June 30, December 31,
2003 2002
--------------- -------------
Total assets......................................................... $ 7,099,239 7,342,800
Investment securities................................................ 873,948 1,137,320
Loans, net of unearned discount...................................... 5,385,599 5,432,588
Allowance for loan losses............................................ 107,848 99,439
Deposits............................................................. 6,014,786 6,172,820
Note payable......................................................... 34,500 7,000
Stockholders' equity................................................. 538,517 519,041
Nonperforming assets................................................. 83,181 82,774
Selected Financial Ratios
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
2003 2002 2003 2002
---- ---- ---- ----
Return on average assets.................................... 0.82% 0.54% 0.95% 0.51%
Return on average equity.................................... 11.03 8.16 12.82 7.69
Net interest margin......................................... 4.44 4.24 4.40 4.22
Efficiency ratio............................................ 66.41 68.69 62.73 68.61